The Advantages of a Church Becoming Incorporated
Often times, many churches, small and large, ask the question: “Should we incorporate” as we continue to serve ministries throughout our local communities? In light of debatable discussions, the advantages as well as disadvantages have been the focal point of church incorporation. As an “unincorporated” entity, the church members are personally liable for the events and acts of other members in the church. Also, the members can be held personally liable for the liabilities of the church, events such as debt obligations, personal injuries, contractual misrepresentations, sexual misconduct, and other legal matters. On the other side of determining the advantage of being an incorporated organization, it is recognized as a formal non-profit legal entity. This act allows the church to borrow, own and transfer property in the name of the church and not having to submit a petition and order to the court for judge approval of conveyance and encumbrance of property. Upon incorporation, the property should be conveyed by deed from the Trustees to the new incorporated church entity. Therefore, the church acts through the board and can designate the appropriate officer who will be authorized to sign legal documents. When the church is in need of a loan, the process is shortened by several weeks since the court action is no longer needed. In addition, members of the church have a shield of liability, affording them the benefit of not being held personally liable for the unlawful acts of other members.
In other words, the incorporated church is viewed as a legal entity separate from its members. Although the members still control the activities of the church, the church becomes a corporation under state law by filing “Articles of Incorporation.” Also, an incorporated church will create internal “Bylaws” to serve as the codes of order for management of organizational internal affairs.
In conclusion, an incorporated church allows the members to determine the governance of the internal operations under the laws of the state; enjoy a shield from personal liability; establish order relating to church disputes; and other conflicts. Lastly, initiating a 501(c)3 status through the corporate process can be considered an effective way of increasing and sustaining ministries.
If you have further questions, in regards to how to incorporate your church, please do not hesitate to contact representatives at the Virginia United Methodist Development Company. Our DevCo staff members are here to assist with next steps and answer general questions in the process of incorporating. However, our guidance should not be viewed as legal advice. Before making any decisions, the church is recommended to obtain an experienced attorney. In addition, the church will still have to abide by the Discipline and have a Charge or Church Conference.
